Distribution agreement is a innominate contract and also empirical type, i.e. the contract which is as common and established in economic relations that it is possible to indicate its basic features.
In commercial relations distribution agreement shall be construed as the agreement in which one of the parties (supplier) undertakes to deliver, on fixed terms, specified product or service and the other party (distributor, dealer) undertakes to buy that product or services or to receive it and pay for it and then sell it to the third parties in his name and on his account. In the scope of selling products and services the distribution agreement has a framework regulation. The partiers undertakes definitely but only framework. For the performance of the agreement it is necessary to perform additional acts called executory acts. This contract creates permanent obligation. In order to proper performing of its obligations the distributor has to adopt its organizational structure to new duties under the distribution agreement and also has to make necessary investments.
Except the obligation to buying products there are various special duties in distribution contract, e.g. dealer’s efforts to widen supplier’s clientele. In practice, these additional obligations include: 1) on the side of the supplier – obligation to give necessary information before concluding the agreement and during the period of its performing, obligation to warn the dealer about decrease of production or supplying capacity, obligation to care for products’ reputation; 2) on the side of the dealer – obligation to distribute and promote the products, obligation to give necessary information before concluding the agreement and during the period of its performing, obligation to warn the supplier of decrease of number of the orders, obligation to observe the supplier’s instructions and to give consent to periodic inspections, obligation to protect the dealer’s rights in intangible assets, obligation to provide guarantee services. In distribution agreement it is also common practice to implement the exclusivity clause.
Author: Att. Michał Fatek
